Lumber Liquidators Announces First Quarter 2014 Financial Results And Updates
Full Year 2014 Outlook
~ Net Sales Increased 6.9% to $246.3 Million, Adversely Impacted by Unusually
Severe Weather
~~ Comparable Store Net Sales Decline 0.6% ~
~ Net Income of $13.7 Million, or $0.49 per Diluted Share
~~ Company Maintains Full Year 2014 Outlook for Net Sales of $1.15 billion to
$1.20 billion and EPS of $3.25 to $3.60
PR Newswire
TOANO, Va., April 30, 2014
TOANO, Va., April 30, 2014 /PRNewswire/ --Lumber Liquidators (NYSE: LL), the
largest specialty retailer of hardwood flooring in North America, today
announced financial results for the first quarter ended March 31, 2014, and
reiterated its outlook for 2014.
Lumber Liquidators
First Quarter Results
Net sales increased $15.9 million, or 6.9%, to $246.3 million in the first
quarter of 2014 from $230.4 million in the first quarter of 2013. The Company
estimates unusually severe winter weather adversely impacted net sales in as
many as 135 of its 331 store locations in operation at March 31, 2014. In
those stores adversely impacted by weather, net sales declined 3.8% to $93.6
million, and in all other stores, net sales increased 14.6% to $152.7
million.
In comparable stores, net sales decreased 0.6% overall, including a 13.1%
decrease in weather-impacted stores and an 8.5% increase in all other stores.
The Company's average sale across all stores rose 2.6% in the first quarter of
2014, indicating a 3.2% decrease in the number of customers invoiced. As the
weather moderated, customer demand generally strengthened across comparable
stores. The Company believes a significant portion of the customer demand
delayed by adverse weather in the first quarter will be recovered in the
second and third quarters of 2014.
Gross margin was 41.1% in the first quarter of 2014 compared to 40.4% in the
first quarter of 2013. The increase in gross margin reflects generally higher
net product margin due to continued shifts in sales mix and lower product
costs, partially offset by higher net transportation costs. Transportation
costs included certain expenses related to the start-up of the West Coast
distribution center, which began serving over 90 western store locations in
March 2014.
Selling, general and administrative ("SG&A") expenses increased $11.3 million,
or 16.7%, to $78.9 million, and included incremental costs of $1.0 million
related to the West Coast distribution center and a $1.7 million increase in
legal and professional fees compared to the first quarter of 2013. SG&A
expenses were 32.0% of net sales in the first quarter of 2014, up from 29.3%
in the first quarter of 2013.
Net income decreased 13.2% to $13.7 million, or $0.49 per diluted share, in
the first quarter of 2014 from $15.8 million, or $0.57 per diluted share, in
the first quarter of the prior year.
Cash and cash equivalents at March 31, 2014 totaled $76.1 million compared
with $72.7 million at March 31, 2013 and $80.6 million at December 31, 2013.
Robert M. Lynch, President and Chief Executive Officer, commented, "Like so
many, our team was frustrated by the severity, scale and duration of the harsh
winter and the adverse impact it had on our net sales. Our customers
generally follow a long purchase cycle, which we believe was either
interrupted or completely suspended due to the unusually severe winter
weather. However, as conditions generally became more seasonal in mid-March,
customer demand increased. The key strategic initiatives we have implemented
over the last two years have strengthened our operations, and we believe we
are more capable than ever of serving customers who postponed their flooring
purchase in the first quarter."
Company Outlook
The Company has reiterated its previously provided full year outlook for net
sales and earnings per share, and now expects to achieve the following for the
full year 2014:
oNet sales in the range of $1.15 billion to $1.20 billion.
oComparable store net sales increasing in the mid to high single digits,
from a previous range of high single to low-double digits.
oThe opening of a total of 35 to 40 new store locations in the expanded
showroom format, from a previous range of 30 to 40 new store locations.
oThe remodeling of a total of 25 to 30 existing stores in the expanded
showroom format, from a previous range of 25 to 35 existing stores.
oCapital expenditures between $80 million and $90 million, including up to
$50 million for supply chain investments.
oDe-leverage of SG&A expenses primarily related to store base expansion,
advertising expenses increasing at a rate greater than net sales, the
opening and continuing operation of the West Coast distribution center and
higher than normal legal and professional fees.
oOperating margin expansion to a range of 13.0% to 13.8%.
oEarnings per diluted share in the range of approximately $3.25 to $3.60,
based on a diluted share count of approximately 27.9 million shares, which
is exclusive of any future impact of the stock repurchase program.
Mr. Lynch concluded, "As we look forward, we remain confident in the long-term
strength of our business model and believe that our value proposition will
allow us to gain further share in the fragmented wood flooring market. Our
infrastructure investment this year will be the largest in our history, as we
open key facilities in our supply chain, expand our finishing capacity,
explore vertical integration and continue our store base expansion. Our new
stores continue to exceed our plans, and we expect that the long-term
investments we have made implementing our key strategic initiatives will
enable us to expand operating margin in the remainder of the year and beyond."
Conference Call and Webcast Information
The Company plans to host a conference call and audio webcast today, April 30,
2014, at 10:00 a.m. Eastern Time. The conference may be accessed by dialing
(877) 407-9039 or (201) 689-8470. A replay will be available approximately
two hours after the call ends through May 7, 2014 and may be accessed by
dialing (877) 870-5176 or (858) 384-5517 and entering pin number 13580205.
The live conference call and replay may also be accessed via audio webcast at
the Investor Relations section of the Company's website,
www.lumberliquidators.com.
About Lumber Liquidators
In its 20th year and withmore than335 locations, Lumber Liquidators is North
America's largest specialty retailer of hardwood flooring. Lumber Liquidators
features more than 340top quality flooring varieties, including solid and
engineered hardwood, bamboo, cork, laminate and resilient vinyl. Additionally,
Lumber Liquidators provides a wide selection of flooring enhancements and
accessories to complement, install and maintain your new floor. Every location
is staffed with flooring experts who can provide advice and useful information
about Lumber Liquidators' low priced product, much of which is in-stock and
ready for delivery.
Withpremierbrands including Bellawood Prefinished Hardwood and Morning Star
Bamboo, Lumber Liquidators' flooring is often featured on popular television
shows such as HGTV's Dream Home and This Old House.
For more information, please visitwww.LumberLiquidators.comor call
1.800.HARDWOOD. You can also follow the company onFacebookandTwitter,and
learn more about its corporate giving program
atLayItForward.LumberLiquidators.com.
Forward-Looking Statements
This press release and accompanying financial tables may contain
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act. These statements are based on currently available information as
of the date of such statements and are subject to risks and uncertainties that
may cause actual results to differ. The Company specifically disclaims any
obligation to update these statements which speak only as of their respective
dates, except as may be required under the federal securities laws.
Information regarding these additional risks and uncertainties is contained in
the Company's filings with the Securities and Exchange Commission.
For further information contact:
Lumber Liquidators Investor Relations
Ashleigh McDermott
Tel: 757.566.7512
(Tables Follow)
Lumber Liquidators Holdings, Inc
Condensed Consolidated Balance Sheets
(in thousands, except share data)
March31, December31,
2014 2013
(unaudited)
Assets
Current Assets:
Cash and Cash Equivalents $ 76,065 $ 80,634
Merchandise Inventories 247,370 252,428
Prepaid Expenses 7,926 6,229
Other Current Assets 11,880 12,916
Total Current Assets 343,241 352,207
Property and Equipment, net 78,409 65,947
Goodwill 9,693 9,693
Other Assets 1,698 1,712
Total Assets $ 433,041 $ 429,559
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable $ 41,496 $ 56,327
Customer Deposits and Store Credits 33,510 22,377
Accrued Compensation 4,813 11,709
Sales and Income Tax Liabilities 8,046 4,878
Other Current Liabilities 18,330 11,709
Total Current Liabilities 106,195 107,000
Deferred Rent 4,862 4,169
Deferred Tax Liability 9,636 9,061
Stockholders' Equity:
Common Stock ($0.001 par value; 35,000,000
authorized; 27,505,476 30 30
and 27,557,570 outstanding, respectively)
Treasury Stock, at cost (2,311,285 and 2,133,307 (103,046) (85,382)
shares, respectively)
Additional Capital 171,419 164,581
Retained Earnings 244,356 230,662
Accumulated Other Comprehensive Loss (411) (562)
Total Stockholders' Equity 312,348 309,329
Total Liabilities and Stockholders' Equity $ 433,041 $ 429,559
Lumber Liquidators Holdings, Inc
Condensed Consolidated Statements of Income
(in thousands, except share data and per share amounts)
(unaudited)
Three Months Ended
March31,
2014 2013
Net Sales $ 246,291 $ 230,419
Cost of Sales 145,004 137,422
Gross Profit 101,287 92,997
Selling, General and Administrative 78,866 67,589
Expenses
Operating Income 22,421 25,408
Other (Income) Expense 94 (210)
Income Before Income Taxes 22,327 25,618
Provision for Income Taxes 8,633 9,837
Net Income $ 13,694 $ 15,781
Net Income per Common Share—Basic $ 0.50 $ 0.58
Net Income per Common Share—Diluted $ 0.49 $ 0.57
Weighted Average Common Shares
Outstanding:
Basic 27,521,443 27,211,506
Diluted 27,832,110 27,783,611
Lumber Liquidators Holdings, Inc
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March31,
2014 2013
Cash Flows from Operating Activities:
Net Income $ 13,694 $ 15,781
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating
Activities:
Depreciation and Amortization 3,437 2,716
Stock-Based Compensation Expense 1,514 1,107
Changes in Operating Assets and Liabilities:
Merchandise Inventories 4,897 (3,522)
Accounts Payable (16,305) (15,966)
Customer Deposits and Store Credits 11,170 2,874
Prepaid Expenses and Other Current Assets (533) 1,952
Other Assets and Liabilities 4,421 6,122
Net Cash Provided by Operating Activities 22,295 11,064
Cash Flows from Investing Activities:
Purchases of Property and Equipment (14,384) (2,589)
Net Cash Used in Investing Activities (14,384) (2,589)
Cash Flows from Financing Activities:
Payments for Stock Repurchases (17,664) (4,276)
Proceeds from the Exercise of Stock Options 2,089 1,278
Excess Tax Benefit from Stock-Based 3,224 3,367
Compensation
Net Cash (Used in) Provided by Financing (12,351) 369
Activities
Effect of Exchange Rates on Cash and Cash (129) (283)
Equivalents
Net (Decrease) Increase in Cash and Cash (4,569) 8,561
Equivalents
Cash and Cash Equivalents, Beginning of Period 80,634 64,167
Cash and Cash Equivalents, End of Period $ 76,065 $ 72,728
Lumber Liquidators Holdings, Inc.
Other Supporting Schedules
(in thousands)
(unaudited)
Segregation of total first quarter 2014 net sales and the percentage change in
comparison to the first quarter of 2013 into those stores the Company believes
were significantly impacted by the unusually severe weather from all other
stores:
Three Months Ended March 31, 2014
Stores Significantly All Other
All Stores Stores
Impacted by Weather
Net sales $ $ 93,628 $
246,291 152,663
Percentage increase 6.9% (3.8)% 14.6%
(decrease)
percentage increase (decrease)
Comparable stores net (0.6)% (13.1)% 8.5%
sales^1
Net sales in markets with
all stores
3.2% (7.1)% 9.8%
comparable (no
cannibalization)
Net sales in cannibalized 17.2% 0.6% 37.0%
markets^2
___________________
^1A store is generally considered comparable on the first day of the
thirteenth full calendar month after opening
^2A cannibalized market has at least one comparable store and one
non-comparable store
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SOURCE Lumber Liquidators
Website: http://www.lumberliquidators.com